A-book, B-book and hybrid execution on MetaTrader 5

What are A-book, B-book, C-book and hybrid execution?

They are the ways a broker can handle the market risk of a client’s trade. The terms are industry shorthand, not legal categories, and most brokers use more than one of them at once.

How does each model make money, and where is the risk?

A-book earns a small, steady amount per lot; B-book earns more per lot on average but with far more variance. That difference drives almost every routing decision.

The reason is structural. An A-book broker’s margin is the gap between what it charges clients, in markup or commission, and what its provider charges it, so it needs volume to cover fixed costs. A B-book broker’s revenue depends on client outcomes over time, so in a good month it can earn far more per lot than an A-book broker and in a bad month it can lose money. That is why a pure A-book broker needs volume and a pure B-book broker needs a strong risk function.

The risk sits in different places. An A-book broker is exposed to its providers: rejected orders, slippage, margin calls at the provider and outages. A B-book broker is exposed to its clients: a run of profitable trading, a large client on the right side of a big move, or a group of traders exploiting stale prices.

How do you model the revenue of each route before you launch?

Start from your own assumptions, not from someone else’s per-lot figures. Published per-lot numbers vary widely between sources, and the ones that matter are the terms in your provider’s offer and the behaviour of your target clients. A simple model needs four inputs: expected monthly volume by account type, the markup or commission you will charge, your provider’s commission and minimums, and a cautious estimate of how client results will vary on the flow you keep.

Run the model for a good month, a normal month and a bad month, and check that the bad month does not breach your capital or your provider’s margin. Then decide which flow you can afford to keep. If you want help building it, message us on WhatsApp and we will send current market figures for providers and set-ups like yours.

How is routing configured on MetaTrader 5?

Routing on MT5 is configured in layers. Client groups decide which trading conditions and which execution route apply to an account. Symbols decide what can be traded and how it is priced. The routing engine — a native gateway with rules in the MT5 administration tools, a third-party bridge or Ultency — decides, order by order, whether to pass the trade on.

The simplest hybrid broker uses groups alone: an “ECN” group whose orders all go to the provider and a “standard” group kept on the book. More advanced set-ups use rules on order size, symbol, client profitability and net exposure. MetaQuotes says Ultency supports automatic coverage rules on position volume, instrument, currency, turnover and profit, and that rules can be applied to single clients, groups or the whole portfolio.

Which engine you choose decides how expressive those rules can be. Our MT5 liquidity bridge guide compares the three engines.

What do typical hybrid routing rules look like?

Hybrid rules usually combine five inputs: account type, order size, instrument, client history and current exposure. YourFintech’s 2026 guide offers one vendor’s example thresholds — small trades under 1 lot internalised by default, trades over 10 lots externalised, and clients with a consistent record of profits moved to A-book. Treat numbers like these as a starting point for your own analysis, not a standard.

• Account type — raw-spread or ECN-style accounts routed to providers; standard accounts eligible for internalisation.
• Order size — anything above a set volume hedged to avoid concentration risk.
• Instrument — exotic pairs and thin markets hedged, where the broker cannot manage the risk cheaply.
• Client history — accounts that profit consistently, trade news or show latency-arbitrage patterns moved to A-book.
• Exposure — once net exposure on a symbol passes a limit, new orders in that direction are hedged.
• Events — temporary rules around major releases, when spreads widen and risk changes quickly.

Worked example: one rule set, five situations

Say a broker runs a standard and a raw-spread account and has written these rules: raw-spread always A-book; standard orders above 5 lots A-book; exotics A-book; clients with three months of consistent profits moved to an A-book group; hedge 80% of net exposure on any pair above a set limit. The numbers are hypothetical.

1. Raw-spread client buys 0.5 lot EUR/USDRouted to the provider under the account-type rule. The broker earns the commission.
2. Standard client buys 0.3 lot EUR/USDKept on the book. The broker earns the spread and carries the risk.
3. Standard client sells 8 lots GBP/USDAbove the size threshold, so routed to the provider.
4. Standard client buys 1 lot USD/TRYExotic, so routed to the provider despite the small size.
5. Net long EUR/USD passes the limitThe engine hedges 80% of the net position with the provider; new trades continue under the normal rules.

How do exposure limits and hedging triggers work?

An exposure limit is the largest net position the broker is prepared to hold on a symbol, or across a currency, before hedging. A hedging trigger is the rule that acts when the limit is reached: hedge the excess, hedge a fixed percentage, or route all new orders in that direction to the provider.

Limits should reflect the broker’s capital and the instrument’s volatility and liquidity. YourFintech gives the example of a broker tolerating far more net exposure on EUR/USD than on an exotic cross. Review limits when your capital changes, before known events and after any period when they were hit often. MetaQuotes’ Ultency page also describes coverage accounts that track funds, profit and loss and total positions, which is the data you need to set limits sensibly.

What do UK and EU regulators expect from A-book and B-book brokers?

Regulators do not ban any of the models, but they expect best execution, managed conflicts of interest and an honest description of how orders are handled. In the UK, the FCA’s best execution rule in COBS 11.2A requires firms to take all sufficient steps to obtain the best possible result for clients, taking account of price, costs, speed, likelihood of execution and settlement, size and nature of the order. A broker that internalises client flow is still the one executing, and still owes that duty.

Conflicts of interest are the second theme, because a B-book broker profits when clients lose. ESMA published a Q&A on CFDs and other speculative products in April 2016 covering conflicts that arise from common business-model features of CFD firms, and on 2 December 2025 announced a Common Supervisory Action with national authorities on MiFID II conflicts-of-interest rules in retail distribution, to run during 2026.

Retail CFD rules apply on top. ESMA’s 2018 product intervention measures and the FCA’s permanent rules (PS19/18, applying to CFDs from 1 August 2019) limit retail leverage to between 30:1 and 2:1 depending on the underlying, require margin close-out at 50% and negative balance protection, ban trading incentives and require a standard risk warning. Rules in other jurisdictions differ; see forex licence jurisdictions for an overview.

What should your order execution policy say about routing?

It should describe what your systems actually do, in language a client can follow. That means stating whether you act as principal on client trades, whether some flow is passed to third parties, the factors that decide where an order goes, and how you monitor execution quality.

The commonest gap we see is a policy written at launch that no longer matches the rules in the bridge or Ultency. Every time routing rules change, check whether the policy still describes them, and keep a dated record of both. If an auditor or regulator compares the two, that record is your evidence.

What should you monitor once hybrid execution is live?

Monitor the outcome of each route, not just the routing itself. A useful daily view includes:

• Net exposure per symbol and currency against limits.
• Profit and loss of B-book flow by group and by symbol.
• Fill rates, slippage and rejects for A-book flow, by provider.
• Clients whose behaviour has changed — sudden size increases, news trading, very short holding times.
• Positions and cash at each provider reconciled with MT5.
• Every routing rule change, with who made it and why.

Who controls routing in a grey label, white label or own licence?

Whoever owns the MT5 server controls the routing engine. An MT5 grey label is a brokerage set up inside another company’s licensed MetaTrader 5 server: you get your own client groups and your brand on the WebTrader, mobile apps, CRM and client portal, while the MT5 server licence stays with the provider. In that model, how your groups are routed is set by the provider under your agreement — and since it decides who carries the risk on your clients’ trades, it should be written down clearly.

In a white label you may have more say, depending on the agreement, and with your own MT5 licence the rules are entirely yours. Before signing an MT5 grey label, ask who books the risk on your clients’ trades, how profits and losses are shared, and what reports you will see. If the answers are vague, send them to us on WhatsApp and we will tell you what to ask next.

How does FXUP help with hybrid execution?

We configure the MT5 side — groups, symbols, markups and the routing engine your set-up uses — and connect it to your providers through a gateway, a bridge or Ultency. We also build the reporting a dealer needs in the broker CRM — our own CRM or a partner CRM, whichever fits your operation — and check that execution looks right from the client’s side on our branded WebTrader. FXUP is not affiliated with MetaQuotes, is not a broker and does not take the other side of trades.

We do not write your execution policy or give legal advice, but we can describe exactly what your systems do so that your compliance adviser can. For the liquidity side, see liquidity provider integration; for the basic definitions, the A-book and B-book glossary entry. If you are designing routing rules now, message us on WhatsApp with your account types and providers.

Questions buyers ask

Not covered here? Ask us on WhatsApp, message @FXUPCK on Telegram or write to [email protected].